SWITZERLAND – Swiss investors are preparing for the introduction of a mandatory shareholder engagement scheme, although questions over its implementation remain unanswered.
In early March, almost 68% of the Swiss electorate voted in favour of the so-called Abzocker-Initiative, an initiative against "rip-off" culture, introduced by MP Thomas Minder.
It was the third-highest 'yes' vote in any referendum in Switzerland.
The government has now drafted bill introducing mandatory shareholder engagement, as well as capping golden handshakes and hellos for asset managers.
PPC metrics pointed out that the bills would only be mandatory for Swiss companies listed either on a Swiss stock exchange or a foreign exchange, but said it was still unclear whether the obligation to vote would also apply to shares within an investment fund.
Pension fund association ASIP said it accepted the people's vote, but called on the government to draft a bill that would keep the burden on Pensionskassen "as little as possible".
Some analysts have warned that mandatory shareholder engagement will force many smaller Pensionskassen into following the advice of only a handful of shareholder engagement services such as ISS or ethos.
Others have argued that the new bill will also have to make allowances for individual members who are dissatisfied with the way their funds are voting.
Meanwhile, Swiss think tank Avenir Suisse cited a number of other votes occurring in regional parliaments in various cantons regarding funding at public pension funds.
According to a directive issued by the top supervisory authority, the Oberaufsichtskommission (OAK), public pension funds can choose whether to target full funding of their liabilities or continue to rely on guarantees by their plan sponsors and remain underfunded.
According to the most recent figures collected by Swisscanto, almost 60% of public funds aiming for full funding remain underfunded.
Mainly French-speaking Switzerland will continue to offer guarantees for public pension funds, but Avenir Suisse notes that Basel-Stadt, Bern, Solothurn and Zug are also discussing this option.
The think tank pointed out that this part-capitalisation was "not cheaper" than full funding despite a CHF50bn (€40.4bn) shortfall for all public funds combined, as "the bill will have to be paid eventually".
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